Does a CIC pay Corporation Tax? How community interest companies are taxed

In short: Yes. A community interest company (CIC) pays Corporation Tax like any other company. HMRC's Company Taxation Manual says a CIC is liable to Corporation Tax on its trading profits, investment income and gains, can claim the normal reliefs, gets no CIC-specific exemptions and can't have charitable status (HMRC: CTM40145). It pays the usual rates and files a Company Tax Return (CT600) when HMRC asks for one. Taxley prepares and files a CIC's CT600 with HMRC, from £49.95 with micro-entity accounts, and its CIC pack (£49) prepares the Companies House package you upload.

Take the 30-second check to see whether Taxley fits your company, or estimate the bill with the Corporation Tax calculator.

Key facts (checked on 13 October 2026)

Is a CIC taxed like a charity?

No. A CIC can't have charitable status, so the tax reliefs charities get don't apply to it. HMRC's Company Taxation Manual says a CIC is liable to Corporation Tax as a company, is eligible for the normal Corporation Tax reliefs, and has no CIC-specific tax exemptions or reliefs (HMRC: CTM40145). The asset lock and the community purpose don't change that.

Charities don't pay tax on most income they use for charitable purposes, but only once HMRC recognises them as charities (GOV.UK: Charities and tax). HMRC's VAT notice for charities puts the difference plainly: charitable incorporated organisations are charities under UK law, and community interest companies are not (HMRC: VAT Notice 701/1, section 5.5.10).

So CIC status on its own brings no charity tax relief, and a CIC normally files an ordinary CT600 without the CT600E pages, which are for charities and community amateur sports clubs (CASCs) claiming their exemptions (HMRC: Completing the CT600E page). A CIC that HMRC has also registered as a CASC is the exception: it follows the CASC rules instead. A club can register only if it meets every CASC condition, such as being open to the whole community and organised on an amateur basis (GOV.UK: CASC eligibility; Corporation Tax Act 2010 s.658). If your company is a registered charity rather than a CIC, our guide to the CT600E for charitable companies covers its return.

What does a CIC pay Corporation Tax on?

On its taxable profits, like any company: profits from trading, investment income such as bank interest, and chargeable gains when it sells assets for more than they cost. HMRC's manual says it is a question of fact whether a particular CIC is trading, and that a CIC is also chargeable on its investment income and gains (HMRC: CTM40145).

Taxable profit isn't the same as the profit in the accounts. The return adjusts it: some costs, such as entertaining clients, can't be deducted, and capital spending gets capital allowances instead of a deduction (GOV.UK: Corporation Tax expenses). A CIC can claim the normal reliefs, such as capital allowances and relief for trading losses.

Reinvesting profits in the community doesn't make them exempt, because there are no CIC-specific exemptions. Like any company, a CIC can deduct qualifying gifts of money to a charity, subject to the conditions on GOV.UK (GOV.UK: Tax when your limited company gives to charity). Our guide on how to calculate Corporation Tax walks through the adjustments.

What Corporation Tax rate does a CIC pay?

The same rates as every other company. For the financial year that started on 1 April 2026, profits up to £50,000 are taxed at the 19% small profits rate, profits over £250,000 at the 25% main rate, and profits in between at 25% less marginal relief, using a standard fraction of 3/200 (GOV.UK: Corporation Tax rates and allowances).

The £50,000 and £250,000 limits are shared between associated companies and reduced for an accounting period shorter than 12 months (GOV.UK: Corporation Tax rates).

Worked examples: a standalone CIC with a 12-month accounting period in the financial year 2026, no associated companies and no dividend income from other companies.

For £80,000, tax at the main rate is £20,000, less marginal relief of (£250,000 − £80,000) × 3/200 = £2,550. Our guide to Corporation Tax rates and marginal relief explains the formula.

Are grants taxable for a CIC?

It depends on what the grant pays for. HMRC's Business Income Manual says grants that meet day-to-day revenue costs, such as interest, are normally trading receipts, and grants that meet capital spending normally aren't, though they reduce the cost on which capital allowances are claimed (HMRC: BIM40451).

Grants from government departments and local authorities follow these normal rules. A capital grant for equipment is deducted from its cost before capital allowances, even if it arrives after the purchase (HMRC: CA14100). The non-trading row matters for CICs because, as HMRC says, whether a CIC is trading is a question of fact.

These are general rules. The answer for a particular grant depends on its terms and on what your CIC does, so read the grant agreement and HMRC's guidance, or ask a qualified adviser, before you decide how to treat it.

Are donations to a CIC taxable?

It depends on why the money was given. HMRC's manual says gifts and voluntary payments aren't taxable unless they attach to a source such as a trade. But a payment made so the money can be used in the business, to keep it trading, or to top up what customers pay for goods or services, is a taxable trading receipt (HMRC: BIM41810).

Being a CIC doesn't let a company claim Gift Aid, which only organisations recognised as charities or community amateur sports clubs can claim (GOV.UK: Claiming Gift Aid). A CIC that HMRC has also registered as a CASC can claim Gift Aid on donations under the CASC rules (GOV.UK: Register as a CASC); any other CIC can't. For the same reason, a company that gives money to a CIC that isn't a registered CASC doesn't get the Corporation Tax relief GOV.UK describes for gifts to a charity or community amateur sports club (GOV.UK: Tax when your limited company gives to charity). As with grants, the treatment of a particular donation depends on the facts, so check HMRC's guidance or take advice if it is large or unusual.

When does a CIC have to file a Company Tax Return?

When HMRC sends it a notice to deliver a Company Tax Return, even if it made a loss or has no tax to pay (GOV.UK: Company Tax Returns). If no notice has arrived but the CIC is chargeable to tax for a period, the law generally requires it to tell HMRC within 12 months of the end of that period (Finance Act 1998, Schedule 18, paragraph 2).

The return is due 12 months after the end of the accounting period, and the tax is usually due 9 months and one day after it ends. A late return costs £200 straight away and another £200 after 3 months, even with no tax to pay (GOV.UK: Company Tax Returns). Those £200 amounts apply to returns whose filing date is on or after 1 April 2026; for earlier filing dates they were £100 (GOV.UK: Increases to late filing penalties). For a year ending 31 March 2026, the tax is due by 1 January 2027 and the CT600 by 31 March 2027, while the accounts and CIC34 are due at Companies House by 31 December 2026.

A CIC that starts doing business must tell HMRC within 3 months of the start of its accounting period (GOV.UK: Corporation Tax trading and non-trading). One that isn't doing business is usually dormant for Corporation Tax; our dormant company tax return guide explains that side.

Does a CIC have to register for VAT?

Only on the same test as any other business, because VAT is a separate tax from Corporation Tax. A CIC must register when its taxable turnover for the last 12 months goes over £90,000, or when it expects taxable turnover to go over £90,000 in the next 30 days alone (GOV.UK: Register for VAT).

Charity VAT reliefs don't follow CIC status. HMRC's VAT notice for charities says community interest companies are not charities and are excluded from the zero rate for donated goods it describes (HMRC: VAT Notice 701/1). Whether a supply is exempt, zero-rated or standard-rated depends on the supply and, for some exemptions, on who makes it, so check HMRC's VAT guidance for each kind of supply your CIC makes.

How does Taxley file a CIC's Company Tax Return?

In the same way as any other company's. You enter or import the accounts figures, Taxley works out the taxable profit, the rate and any marginal relief, and files the CT600 with HMRC once the return is paid. A return with micro-entity accounts costs £49.95, one with small-company accounts £139, and a dormant nil return £9.50.

Taxley (taxley.co.uk) is UK online software that prepares and files the CT600 with HMRC and, for most companies, the annual accounts with Companies House. For a CIC, Companies House needs the accounts together with the CIC34, and only a person can file them, not filing software: by uploading a package or typing small full accounts into its CIC service, or, until 1 April 2028, on paper. Taxley's CIC pack (£49) prepares the CIC34 and the ZIP from the accounts in your return; you upload it and pay Companies House's £15. Our guide to filing CIC accounts and the CIC34 covers that step.

1. Start a return for your CIC and choose its accounts type: micro-entity, small or dormant.
2. Enter or import the figures, including any grants and donations the CIC received in the year.
3. Check the tax computation, confirm the declaration and pay. Taxley files the CT600 with HMRC.
4. If you want the Companies House package, open the CIC pack on the filing page, answer its questions and pay for it once the accounts are final.

Taxley is software, not tax advice: the directors decide how each grant and donation is treated, and the return is the company's own statement to HMRC. Take the 30-second check to see whether Taxley fits your company, or see the prices.

Frequently asked questions

Does a CIC limited by guarantee pay Corporation Tax?

Yes. HMRC's manual covers CICs limited by shares and CICs limited by guarantee alike: a CIC is liable to Corporation Tax as a company, whichever form it takes. Being limited by guarantee, with no shareholders to pay dividends to, doesn't create an exemption.

Is a CIC exempt from Corporation Tax if it reinvests its profits?

No. HMRC says there are no CIC-specific tax exemptions or reliefs, so taxable profits are taxed in the normal way whether the CIC keeps them or reinvests them. The asset lock controls how the company's assets are used, not how its profits are taxed.

Can a CIC claim Gift Aid on donations?

Usually not. Gift Aid can only be claimed by organisations that HMRC recognises as charities or community amateur sports clubs (CASCs), and a CIC can't be a charity. So a CIC claims no Gift Aid, whatever it uses the gifts for, unless HMRC has also registered it as a CASC, in which case the CASC rules apply.

Does a CIC pay tax on bank interest?

Yes. HMRC's manual says a CIC is chargeable on its investment income, which includes bank interest. Earning interest also makes a company active for Corporation Tax, so a CIC with interest isn't dormant for HMRC even if it hasn't started trading yet.

Can a CIC become a charity to get charity tax reliefs?

The CIC Regulator lists converting to a charity or a charitable incorporated organisation as one of the only ways to leave CIC status. Charity tax reliefs then depend on HMRC recognising the charity. It is a major legal change with its own conditions, so take professional advice before deciding.

General information, not personalised legal, tax or accounting advice.

Sources (checked on 13 October 2026):

• HMRC Company Taxation Manual: CTM40145, Community Interest Companies
• GOV.UK: Corporation Tax rates and allowances
• GOV.UK: Corporation Tax rates, expenses and reliefs
• HMRC Business Income Manual: BIM40451, grants and subsidies
• HMRC Business Income Manual: BIM40455, government and local authority grants
• HMRC Business Income Manual: BIM41810, voluntary receipts
• HMRC Capital Allowances Manual: CA14100, contributions
• GOV.UK: Company Tax Returns
• GOV.UK: Increases to Corporation Tax late filing penalties
• Finance Act 1998, Schedule 18, paragraph 2
• GOV.UK: Corporation Tax, trading and non-trading
• GOV.UK: Charities and tax
• GOV.UK: Claiming Gift Aid as a charity or CASC
• GOV.UK: Register as a community amateur sports club, eligibility
• Corporation Tax Act 2010, section 658 (community amateur sports clubs)
• GOV.UK: Tax when your limited company gives to charity
• HMRC: How VAT affects charities (VAT Notice 701/1)
• GOV.UK: Register for VAT
• HMRC: Completing the CT600E page
• CIC Regulator: Community interest companies guidance, things to consider